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The International Monetary Fund (IMF) on Tuesday retained its growth forecasts for India at 7.5 per cent in FY17 and FY18, but further trimmed projections for global economic growth for 2016 and the year after that due to some loss of growth momentum in the advanced economies and continuing headwinds for emerging countries.

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It has estimated India’s FY16 GDP growth at 7.3 per cent before moving up to 7.5 per cent in the next two fiscals. Sustaining strong growth over the medium term would require labour market reforms and dismantling of infrastructure bottlenecks, especially in the power sector, it said in its latest World Economic Outlook.

“In India, monetary conditions remain consistent with achieving the inflation target of 5 per cent in the first half of 2017, although an unfavourable monsoon and an expected public sector wage increase pose upside risks,” the fund noted.

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In the new report, IMF has forecast global growth at 3.2 per cent in 2016 and 3.5 per cent in 2017, a downward revision of 0.2 percentage point and 0.1 percentage point, respectively. Cumulatively, since October 2015, IMF has lowered world GDP growth projection by 0.4 and 0.3 percentage point in 2016 and 2017, respectively. Growth in China was slightly stronger than previously forecast even as the IMF cut US growth by 0.2 percentage point for 2016 and by 0.1 percentage point in 2017.

Warning on Brexit

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The IMF warned on Tuesday that a British exit from the European Union could inflict severe damage to the world economy by disrupting international trade.

Listing the June 23 referendum on membership as one-of-seven downside risks for the world economy, the global financial body said the national vote on whether to stay or go has already created uncertainty for investors. With FE & PTI